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Small and medium-sized companies in Germany can now benefit from a new DIN specification when outsourcing technology-oriented services. The norm developed by the German Institute for Standardization (DIN) defines a standard process and provides guidelines for a systematic and effective outsourcing procedure. With this new standard, outsourcing to specialized providers of outsourcing services is much easier and more attractive for small and medium enterprises (SMEs) in Germany. This creates new growth potential for business process outsourcing vendors in the German market.
The new standard , DIN SPEC 1041, developed in cooperation with a number of experts, vendors and users (including IBM, Comdirect and PriceWaterhouse Coopers), is based on a textbook scenario in which a company seeks to transfer an internal process to an external BPO provider. The DIN specification divides the outsourcing process into four basic phases, addressing each individual step in detail. This constellation provides companies with comprehensive support for the planning and execution of outsourcing projects. The standard offers a general description and is therefore not tied to any specific form of outsourcing, allowing it to be applied in a variety of scenarios.
The new DIN standard is expected to provide the greatest benefit to SMEs, which account for over three million businesses in Germany and therefore define the structure of the German economy. These companies will be able to better utilize outsourcing in order to structure their business processes more efficiently. Professor Markus Nu?ttgens of the University of Hamburg, who participated in the development of the standard and specializes in Business IT: “Especially SMEs can benefit from this, as they generally cannot afford their own consultants.” Consequently the German market for outsourcing services, characterized in recent years by strongly increasing demand, receives an additional boost.
According to NelsonHall, annual growth rates for the German BPO market are forecast at around seven percent. By 2013, the BPO market in Germany is expected to have reached an estimated revenue volume of EUR 14.4 billion. Approximately one third of German companies plan to outsource business processes within the next two-years, creating a number of opportunities for international and domestic companies in a growing industry.
With a population of 82 million, Germany is Europe’s largest market and therefore an attractive location to locally serve clients’ needs. A number of companies are currently active in the German outsourcing industry. Nevertheless, market entry conditions remain attractive for new vendors, as the BPO market is not dominated by any single player. The top 20 BPO providers claim less than 30 percent of total market share.
For outsourcing service providers seeking an ideal business location to serve a broad customer base, Germany’s highly trained personnel provide a key advantage. The country’s dual education system, which combines the benefits of classroom-based and on-the-job training, provides companies with a broad array of highly qualified and motivated employees at competitive costs. Labor turnover rates as low as five to ten percent also minimize substitute recruitment and training costs, increasing stability and reliability for providers of outsourcing.